Dish Network is heading to court with several major broadcasters, with a focus on skipping ads

Fox, NBC and CBS are taking Dish Network to court because of a new feature that allows subscribers to skip over commercials in recorded content.

Dish is currently the No. 2 satellite TV provider with 14 million subscribers, and also filed suit to make ad-skipping acceptable with an official judgment.

If the current dispute isn’t handled immediately, there is a chance that it could cause distributors to pull their content from Dish.

The company’s “AutoHop” feature is unique because subscribers are able to skip all of the commercials, instead of fast-forwarding and jumping in small segments. AutoHop isn’t available to all 14M subscribers, and can only be used to skip commercials for prime-time broadcast TV episodes.

“Viewers have been skipping commercials since the advent of the remote control," said David Shull, Dish Senior VP of programming, in a statement. “We are giving them a feature they want and that gives them more control."

As more TV viewers watch TV episodes and movies on-demand on their DVRs, advertisers and TV broadcasters are looking to better monetize their content. The TV ad industry nears $20 billion per year, but advertisers are increasingly worried about DVR viewers -- a continually growing number -- simply skipping ads of recorded programs.

Fox and several other major broadcasts prohibit users from fast forwarding through on-demand content, so they have to wait for the ads to finish. In its licensing agreement with Dish, for example, Fox says the provider can retransmit prime-time content, though fast forwarding through commercials is prohibited.

Dish doesn’t believe AutoHop will make a long-term impact on whether or not commercials are viewed, but the big four broadcasters and Time Warner Cable strongly disagree.

After the service was first announced, Dish reportedly welcomed input from broadcasters, but there were immediate rumors of possible lawsuits. It should prove interesting to see which side wins the court debate, because it could have a major ripple effect hitting advertisers and subscribers.

quote: Like it or not shows exist to make money, historically how they did that is primarily through commercials. If you cannot sell an advertiser on the benefits of a 30 second spot, then the funding for the shoot is simply not there.

If people want to skip the 30 second commercials, then the 30 second commercials are the problem, not the commercial-skipping technology. To argue the technology is in the wrong is morally the same as arguing that you shouldn't stop watching the TV to go to the bathroom when a commercial comes on. My remote control allows me to change channels away from a commercial. Should it now be illegal to add a timer on the remote which tells you when 30/60/90 seconds is up so you know to switch back?

The real problem here is that the 30 second commercial is considered by the industry to be holy and immutable. The industry needs to grow and develop a new revenue model which circumvents this problem with the 30 second commercial. My hunch is that we'll be seeing fewer commercials and more paid product placement in the future. If the ads are part of the show, there's no skipping it.